The Ministry of Construction is seeking strategic investors in the Urban and Industrial Zone Development Investment Corporation (IDICO), the Housing and Urban Development Corporation (HUD), the Vietnam Cement Industry Corporation (Vicem), and the Song Da Corporation.

Deputy Minister of Construction Bui Pham Khanh has signed Official Correspondence No. 2192 calling for strategic investors after the MoC enterprises are equitized.

Song Da, HUD, IDICO, and Vicem are the final four critical enterprises of MoC not to have undergone equitization. Ten of MoC’s 14 critical enterprises had done so by the end of 2014.

According to MoC the four have experienced difficulties during their equitization process. Song Da and Vicem planned to conduct IPOs in the first quarter of this year but were delayed by the transfer of the loss-making Ha Long Cement Company.

The enterprises are leading corporations in construction and thermal electric, urban and industrial zone construction, construction materials, and property, among others, with prestige and experience from years of operations and have made numerous contributions to the development of the construction sector in particular and Vietnam’s economy in general.

“These enterprises are continually speeding up their reform process, improving their financial capacity, management, and technology to meet the increasing requirements for economic development during global integration,” Deputy Minister Khanh said.

In late September MoC proposed an equitization plan for Song Da, with the State to retain a 51 per cent holding post-equitization and 36 per cent by 2020, via a statement submitted to the Prime Minster.

Song Da will issue 450 million shares at an initial price of VND10,000 ($0.45). It expects to earn VND2.89 trillion ($129.7 million) in revenue and VND160 billion ($7.2 million) in pre-tax profit in 2016 after the sale. Staff will hold 0.18 per cent and strategic investors 30 per cent while 18.82 per cent will be publicly offered.

Potential strategic investors must register to purchase at least 5 per cent of the 30 per cent set aside, costing VND225 billion ($10.08 million), and be able to meet requirements regarding financial capacity and have prestige and branding in the market.  

Candidates must have had total assets of at least VND1 trillion ($44.9 million) as at 2015 and equity of VND300 billion ($13.5 million) and must be profitable and not saddled with bad debts.

Song Da’s equitization will take place at a time of massive losses. According to its financial report, debts of VND10.2 trillion ($457.6 million) far outweighed equity of VND2.6 trillion ($116.7 million) as at the end of 2015.

VN Economic Times